Wednesday, November 5, 2008

Beware of Unapproved Downpayment ProgramsFederal law that took effect Oct. 1 prohibits FHA from accepting seller-funded downpayments. Be aware that programs are being created to get around this restriction. Some are being set up as earned-income programs in which a buyer asks a seller to enroll in a "property alliance" for a fee. After an administrative cost is paid to the program, the fee goes to the buyer as a commission that can theoretically be considered as earned income. While HUD does recognize earned income, these programs are not considered legitimate means of earned income for meeting the downpayment requirement for FHA-insured mortgages. For more info contact Jerome Nagy, 202/383-1233.

2009 Conforming Loan Limit GuidanceFannie Mae and Freddie Mac have each released guidance on conforming loan limits for high cost areas that are scheduled to take effect in 2009. Unless Congress acts during a lame-duck session after the election, conforming loan limits in some high cost areas will go down. For 2008, the loan limits are 125 percent of the area median house price, up to $729,750, but not less than $417,000. Starting in 2009, the limits will be 115 percent of area median, up to $625,5000, but not less than $417,000. NAR supports making the 2008 limits permanent. For more info contact Jeff Lischer, 202/383-1117.

2009 VA High-Cost Loan Limit Set at $1,094,625The limit for loans backed by the U.S. Department of Veterans Affairs in high-cost areas like California and Washington, D.C., is equal to 125 percent of the local area median home price, capped at 175 percent of the conforming loan limit. For the remainder of 2008 that conforming loan limit is $729,750. For 2009, that limit will be $625,500. Therefore, the loan limit for 2009 will be $1,094,625. The limit could go higher in Alaska, Hawaii, Guam, and the U.S. Virgin Islands. Access a VA notice on the loan limit online. For more info contact Megan Booth, 202/383-1222.